World ETFs allow passive investors to get a globally diversified portfolio with just one ETF, and without having to pay hefty fees.
The most popular World ETF options are Vanguard’s Total World Stock Index Fund ETF (VT) and iShares’ MSCI ACWI ETF (ACWI).
Here, we explore the subtle differences between VT vs ACWI ETFs and help you decide which is the best World ETF for your portfolio.
VT vs ACWI ETF
| Vanguard Total World Stock Index Fund ETF | iShares MSCI ACWI ETF | |
| Ticker | VT | ACWI |
| Fund Manager | Vanguard | Blackrock |
| Expense Ratio (Annual) | 0.07% | 0.32% |
| Underlying Index | FTSE Global All Cap Index | MSCI All Country World Index |
| AUM (USD) | $35.7 B | $18.7 B |
| Average Daily Volume | $225.87M | $382.98M |
| Inception Date | 24 Jun 2008 | 26 Mar 2008 |
| Dividend Yield | 2.11% | 1.71% |
| No. of Constituents | 9523 | 2376 |
| Why This ETF? | Exposure to large-, mid-, and small-capitalization companies located around the world | Exposure to large and mid-capitalization developed and emerging market equities |
VT vs ACWI – Differences
In a nutshell, VT is cheaper with an expense ratio of just 0.07% while ACWI charges 0.32%. VT offers a larger portfolio of 9523 stocks that includes large, mid and small cap companies while ACWI ETF has 2376 holdings across large and mid cap companies across the whole.
Let’s take a deeper dive into their details and differences:
Expense Ratio
Expense ratio is a key difference between VT vs ACWI that retail investors will take note off the bat – VT has an annual expense ratio of just 0.07% while ACWI charges 0.32%.
The 0.25% difference can directly affect your overall returns in the long run, which could turn some investors off.
Underlying Index
VT tracks the FTSE Global All Cap Index which is market-capitalization weighted index tracking the performance of large, mid and small cap stocks globally. In comparison, ACWI tracks the MSCI All Country World Index which tracks the performance of large and mid-capitalization developed and emerging market equities.
Due to the different indices that VT and ACWI track, their portfolio varies in terms of the geographical breakdown and also the number of constituents.
Let’s take a quick look at these in detail:
Region and Geographical Breakdown
Here’s the differences between the geographical breakdown of VT vs ACWI:
Here’re the numbers if you want the full details:
| Vanguard Total World Stock Index Fund ETF (VT) | iShares MSCI ACWI ETF | |
| United States | 58.70% | 60.07% |
| Japan | 6.20% | 5.47% |
| United Kingdom | 4.10% | 3.91% |
| China | 3.70% | 3.50% |
| France | 2.70% | 3.20% |
| Canada | 3.10% | 3.06% |
| Switzerland | 2.40% | 2.53% |
| Germany | 2.10% | 2.16% |
| Australia | 2.30% | 2% |
| Taiwan | 1.80% | 1.66% |
| India | 1.70% | 1.42% |
| Korea (South) | 1.40% | 1.28% |
| Netherlands | 1.10% | – |
| Sweden | 0.90% | – |
| Hong Kong | 0.80% | – |
| Denmark | 0.70% | – |
| Italy | 0.70% | – |
| Brazil | 0.60% | – |
| Spain | 0.60% | – |
| Saudi Arabia | 0.40% | – |
| Finland | 0.30% | – |
| Singapore | 0.40% | – |
| South Africa | 0.40% | – |
| Belgium | 0.30% | – |
| Mexico | 0.30% | – |
| Thailand | 0.30% | – |
| Indonesia | 0.20% | – |
| Israel | 0.20% | – |
| Malaysia | 0.20% | – |
| Norway | 0.20% | – |
| United Arab Emirates | 0.20% | – |
| Austria | 0.10% | – |
| Chile | 0.10% | – |
| Ireland | 0.10% | – |
| Kuwait | 0.10% | – |
| New Zealand | 0.10% | – |
| Philippines | 0.10% | – |
| Poland | 0.10% | – |
| Portugal | 0.10% | – |
| Qatar | 0.10% | – |
| Turkey | 0.10% | – |
ACWI doesn’t provide a clear regional breakdown, but here’s a bird’s eye view of VT’s:
No. of Constituents
VT is a larger ETF in terms of the number of constituents in its portfolio. At the point of writing, it holds 4 times more stocks than ACWI!
- VT: 9523
- ACWI: 2376
Dividend Yield
Yes, both of these World ETFs pay dividends. At the point of writing, VT offers more yield:
Fund Manager
VT is an ETF under The Vanguard Group whereas ACWI is managed by Blackrock’s iShares.
Both managers have a long history in finance and are unlikely to collapse or go under in the long run (unless there’s another black swan event).
Now that we’ve taken a look at their differences, let’s take a look at the similarities between VT and ACWI ETFs.
VT vs ACWI – Similarities
Strategy
Both ETFs track the performance of the World indices passively.
Although their underlying indices vary, they give investors exposure to a global portfolio that includes companies in both developing markets and emerging markets.
Purpose
Both ETFs are good options for passive investors who just want a no-brainer way to invest in listed companies across Earth, via a single investment vehicle.
Returns
While there are subtle differences, those differences may not matter for retail investors. In terms of returns, both ETFs performed pretty similarly.
Here’s a comparison of their average 1, 3, 5, and 10-year annual returns, accurate as of 3 March 2023:
| Vanguard Total World Stock Index Fund ETF (VT) | iShares MSCI ACWI ETF | |
| 1-Year Return | -7.84% | -8.12% |
| 3-Year Return | 9.02% | 6.94% |
| 5-Year Return | 6.00% | 5.67% |
| 10-Year Return | 8.19% | 8.44% |
| Inception | 6.35% (Since 06/24/2008) | 6.21% (Since 03/26/2008) |
That said, you should take note of the differences in their expense ratio!
Liquidity
If you’re looking to invest in a single World ETF, you’ll want an ETF with good liquidity. This makes sure that you can sell at your desired price (i.e. low spreads), without having to wait for your order to be fulfilled when you need the cash.
In the case of VT vs ACWI, they are (almost) equally liquid.
Here’s a quick look at the difference in liquidity between VT and ACWI:
| Vanguard Total World Stock Index Fund ETF (VT) | iShares MSCI ACWI ETF | |
| Assets Under Management (AUM) | $35.7 B | $18.7 B |
| Average daily volume | $225.87M | $382.98M |
| Average Spread | 0.01% | 0.01% |
Listed in the US
Both VT and ACWI ETFs are listed in the United States; VT being listed on the NYSEARCA while ACWI is listed on NASDAQ.
With so many constituents in the basket, it is inevitable that both VT and ACWI would collect and payout dividends to their shareholders.
While this might be a bonus for long term investors who are chasing capital gains with these World ETFs, you should note that both ETFs will be subjected to US’ withholding tax regulations on dividends.
Sector Breakdown
The sector breakdown of VT and ACWI are pretty similar. However, if you want to nitpick, you will notice that VT has a little more exposure to the Industrials sector while ACWI has a larger exposure to the Telecommunications sector.
| Vanguard Total World Stock Index Fund ETF (VT) | iShares MSCI ACWI ETF | |
| Technology | 19.59% | 21.05% |
| Financials | 15.11% | 15.24% |
| Consumer Discretionary | 13.99% | 11.05% |
| Industrials | 13.90% | 10.18% |
| Health Care | 11.73% | 12.26% |
| Consumer Staples | 6.26% | 7.35% |
| Energy | 5.46% | 5.17% |
| Basic Materials | 4.59% | 4.98% |
| Real Estate | 3.44% | 2.58% |
| Utilities | 3.18% | 2.87% |
| Telecommunications | 2.75% | 6.94% |
Holdings
While VT and ACWI track different indices, their top 10 holdings look pretty similar:
| Top 10 holdings | Vanguard Total World Stock Index Fund ETF (VT) | iShares MSCI ACWI ETF |
| Apple Inc. | 3.13% | 3.95% |
| Microsoft Corp. | 2.68% | 2.97 % |
| Amazon.com Inc. | 1.32% | 1.44% |
| Nvidia Corp. | 0.68% | 0.96% |
| Tesla Inc | 0.65% | 0.93% |
| Alphabet Inc. Class A | 0.87% | 0.92% |
| Alphabet Inc. Class C | 0.75% | 0.85% |
| Exxon Mobil | 0.69% | 0.79% |
| UnitedHealth Group Inc. | 0.67% | 0.76% |
| Taiwan Semiconductor Manufacturing | #14 | 0.71% |
| Berkshire Hathaway Inc. | 0.67% | #13 |
Coincidentally (or not), their top 10 holdings is pretty similar to that offered by S&P 500 index ETFs.
VT vs ACWI ETF: Which the Best World ETF?
While VT and ACWI track different indices, their historical returns and top 10 holdings are pretty similar. They are also both weighted towards the US markets (VT with 58.70% while ACWI has 60.07%).
That said, a significant difference for retail investors would be their expense ratio – VT charges just 0.07% while ACWI charges 0.32%. This difference would impact the eventual results of investing in VT vs ACWI.
In conclusion, I would say that on top of the cost, VT offers investors exposure to the longer tail, small cap companies. Maybe one of them might become the next unicorn and skyrockets VT’s return beyond ACWI’s in the future, but that remains to be seen.
p.s. if you’re new to ETFs, we wrote this ETF investing guide for you.
